ecopulse 
Indonesia has posted a dazzling performance in the palm oil sector, with total exports reaching a staggering US$14.02 billion. This surge is fueled by strategic trade and domestic policy maneuvers that have bolstered both volume and value in this critical commodity.
Export Gains and Trade Surplus
In February alone, crude and refined palm oil exports jumped nearly 90% year-on-year, reaching US $2.27 billion. Export volumes hit 2.06 million metric tons, underscoring strong demand.
The value of exports from January through the first half of 2025 climbed to US$11.43 billion, representing a 24.8% year-on-year increase.
By May, the cumulative export value surged further to US$13.64 billion (January–May), a 35.9% increase over the same period in 2024.
Driving Forces Behind the Surge
Export Tax Cuts: A steep reduction in export taxes—from US$178 to US$124 per ton—made Indonesian palm oil more attractive compared to Malaysia, resulting in a 62.2% month-on-month increase in February shipments.
Biodiesel Demand: Indonesia’s ambitious B40 biodiesel mandate (40% palm oil blend) continues to absorb substantial quantities of domestic production, balancing export supply and supporting global prices.
Trade Impact & Economic Implications
These export gains have propelled non-oil and gas trade significantly upward, reinforcing Indonesia’s trade surplus for 58 consecutive months, which is now extending into the 2025 second quarter.
Rising palm oil prices—fueled by tight supply due to biodiesel requirements—have created a new pricing paradigm. Indonesian palm oil now commands premiums above soybean oil, upending previous discount trends.
Broader Context & Looking Ahead
Indonesia’s palm oil industry is in a phase of robust growth, buoyed by policy incentives, a biodiesel-driven domestic market, and shifting global trade patterns. This success not only strengthens foreign exchange earnings but also highlights Indonesia’s strategic positioning in global vegetable oil markets.
Going forward, the sustainability of this trajectory will hinge on:
· Continued favorable tax and trade policies,
· alancing biodiesel and export demands,
· Managing production challenges such as aging plantations and environmental concerns, and
· Navigating certification and environmental scrutiny from international markets like the EU.
